In the chart below, the black line (the 50 day moving average) crossed the olive green line (the 150 day moving average) a couple of weeks ago. Now, at a time of sideways movement with a lot of volatility you do run the risk of being whipsawed (i.e., getting in and then getting out again too soon, at an unfavourable price) if you use this kind of technical analysis. All the same, the rally since the low is fairly typical of a bear market correction. The market gets oversold and rallies back to the moving average, in this case a falling moving average. If it turns down when it grazes the moving average, that's bearish.
See what a good sell signal it was in early June 2011? And how the market rallied back to the short term moving average, before selling off again? As I said above, not always infallible, but ...
Keep your eyes peeled, folks. Interesting times.
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